United States Court of Appeals, District of Columbia Circuit
May 15, 2017
from the United States District Court for the District of
Columbia (No. 1:14-cv-00851)
M. Salzman, Attorney, U.S. Department of Justice, argued the
cause for appellant. With him on the briefs were Mark B.
Stern, Attorney, Janice L. Hoffman, Associate General
Counsel, U.S. Department of Health & Human Services, and
Susan Maxson Lyons, Deputy Associate General Counsel.
Catherine E. Stetson argued the cause for appellees. With her
on the brief was Morgan L. Goodspeed. Adam K. Levin entered
S. Connelly was on the brief for amicus curiae Fund for
Access to Inpatient Rehabilitation in support of appellees.
Before: Garland, Chief Judge, and Henderson and Wilkins,
Wilkins, Circuit Judge:
implies can. That is, in order
for law - man-made or otherwise - to command the performance
of an act, that act must be possible to perform. This lofty
philosophical maxim, ordinarily relevant only to bright-eyed
college freshmen, sums up our reasoning in this case.
established an administrative appeals process for denied
Medicare reimbursement claims, and directed the U.S.
Department of Health and Human Services ("HHS") to
complete that process within a specified timeframe. Buried
under an ever-growing backlog of over a half-million appeals,
HHS failed - and continues to fail - to comply with the
statutorily mandated deadlines. Consequently, the American
Hospital Association and three healthcare providers
(together, "Healthcare Providers") sought a
mandamus order to force the HHS Secretary to clear the
backlog and adhere to the statute's timeframe. The
District Court, in turn, thoughtfully and scrupulously
weighed the equities, concluding that the scales tipped in
favor of mandamus.
District Court was then confronted with the unenviable task
of defining the scope and substance of the mandamus order. In
an effort to minimize the judiciary's intrusion on the
political branches' prerogatives, the Court adopted an
ends-oriented approach of setting targets for HHS to hit,
leaving to the Secretary the choice of means for hitting
those targets. But what were the appropriate targets to set?
The Healthcare Providers proposed an ambitious four-year
timetable. The Secretary criticized that timetable as
impossible to achieve lawfully and potentially
counterproductive, but offered no alternative. Lacking a
competing proposal, the District Court adopted the timetable
suggested by the Healthcare Providers. In doing so, however,
the Court declined to seriously grapple with the
Secretary's assertion that lawful compliance with such a
mandamus order would be impossible. That is, the
Court commanded the Secretary to perform an act - clear the
backlog by certain deadlines - without evaluating whether
performance was possible. We conclude that,
notwithstanding the District Court's earnest efforts to
make do with what the parties presented, the failure to
seriously test the Secretary's assertion of
impossibility and to make a concomitant finding of
possibility was an abuse of discretion. The Court
declared that a party ought without regard for
whether the party can.
provides federally funded health insurance to disabled
persons and those aged 65 or older . . . ." Council
for Urological Interests v. Burwell, 790 F.3d 212, 215
(D.C. Cir. 2015) (discussing 42 U.S.C. §§ 1395
et seq.). After a healthcare provider
(e.g., a hospital) performs a service it believes is
covered by Medicare, it submits a claim for reimbursement to
the Centers for Medicare and Medicaid Services, an agency
within HHS. 42 U.S.C. §§ 1395ff(a)(1)-(2),
1395kk-1(a); 42 C.F.R. §§ 405.904(a)(2),
405.920-405.928. When a provider is denied reimbursement, or
is otherwise "dissatisfied" with the initial
determination, it is entitled to a four-level administrative
appeals process, followed by judicial review. See
generally 42 U.S.C. § 1395ff. We previously
described the process in greater detail. See Am. Hosp.
Ass'n v. Burwell, 812 F.3d 183, 185-87 (D.C. Cir.
2016) (hereinafter, "AHA I").
start to finish, the administrative appeals process is
designed to take less than one year. To keep things moving,
the statute sets specific time frames for each of the four
levels of the process: sixty days for the first level, 42
U.S.C. § 1395ff(a)(3)(C)(ii); another sixty days for the
second level, id. § 1395ff(c)(3)(C)(i); ninety
days for the third level, id. §
1395ff(d)(1)(A); and another ninety days for the fourth
level, id. § 1395ff(d)(2)(A). "For years,
the administrative appeal process functioned largely as
anticipated, with its various stages typically completed
within the statutory time frames." AHA I, 812
F.3d at 186 (citing Am. Hosp. Ass'n v. Burwell,
76 F.Supp.3d 43, 46 (D.D.C. 2014)).
starting in fiscal year 2011, an unexpected and dramatic
uptick in appeals produced a jam in the process. The uptick
was attributable to multiple causes, including "a large
increase in the number of new beneficiaries as members of the
'baby boom' generation began to reach 65 and become
eligible for Medicare, " and "a growing sense,
among at least some members of the provider community, that
it is a good business practice to appeal every denied
claim." Decl. of Ellen Murray, Chief Fin. Officer of the
Dep't of Health and Human Servs., J.A. 91-92.
Furthermore, as we stressed in our previous decision, much of
the increased workload can be traced back to the
congressionally mandated Medicare Recovery Audit Program.
AHA I, 812 F.3d at 186-87. Under that program,
recovery audit contractors ("RACs") would review
reimbursement claims that have already been paid,
"identify underpayments and overpayments, " and
"recoup overpayments." 42 U.S.C. §
1395ddd(h)(1). When a RAC flags an overpayment, the
healthcare provider could either repay the difference or
appeal the RAC's decision through the four-level
administrative appeals process, as though the claim were
denied at the outset. Id. § 1395ddd(f)(2)(A).
Instead of repaying the difference, many providers elected to
avail themselves of the administrative process. After the
program was implemented, "the number of appeals filed
ballooned from 59, 600 in fiscal year 2011 to more than 384,
000 in fiscal year 2013." AHA I, 812 F.3d at
those appeals moved through the process, they piled up at the
third level, where an administrative law judge
("ALJ") reviews the matter de novo.
Instead of waiting in line, providers stuck at the ALJ level
may skip to the next, through a process called
"escalation." 42 U.S.C. § 1395ff(d)(3). But
that choice comes at a cost: the provider must forfeit
certain procedural rights, such as a hearing before an
independent ALJ. Id. § 1395ff(d)(1), (2). Many
claimants, therefore, have been reluctant to
"escalate" their appeals, and the ALJ backlog
continues to grow. As of June 2, 2017, there was a backlog of
607, 402 appeals awaiting review at this level. Status Report
of Def. Thomas Price at 2, No. 14-cv-851 (June 5, 2017), ECF
No. 56. On its current course, the backlog is projected to
grow to 950, 520 by the end of fiscal year 2021,
id., and "some already-filed claims could take
a decade or more to resolve, " AHA I, 812 F.3d
at 187. This is, of course, far outside the
ninety-day timeframe set by statute. 42 U.S.C. §
2014, the Healthcare Providers filed suit seeking a mandamus
order to compel the HHS Secretary to clear the backlog and
comply with the ninety-day statutory timeframe for ALJ
Healthcare Providers moved for summary judgment, and the
Secretary simultaneously moved to dismiss for lack of
subject-matter jurisdiction. Am. Hosp. Assoc. v.
Burwell, 76 F.Supp.3d 43, 45 (D.D.C. 2014). The District
Court first grappled with whether it faced a jurisdictional
question - i.e., whether, pursuant to 28 U.S.C.
§ 1361, the threshold mandamus requirements were met,
United States v. Monzel, 641 F.3d 528, 534 (D.C.
Cir. 2011) - or a merits question - i.e., whether
mandamus would be equitable, Telecomms. Research &
Action Ctr. v. FCC, 750 F.2d 70, 80 (D.C. Cir. 1984).
The Court concluded that the jurisdictional and equitable
merits inquiries were one and the same ("merged"),
and so resolved the summary judgment and dismissal motions
together. Am. Hosp. Assoc., 76 F.Supp.3d at 49-50.
Based on this merged analysis, the District Court granted the
Secretary's motion to dismiss, reasoning that
"HHS's budgetary constraints, its competing
priorities, and its incipient efforts to resolve the issue
together dictate that mandamus is not warranted."
Id. at 56. "Congress, " furthermore, was
"aware of the situation and [was] in a position to
address the problem." Id.
appeal, we reversed the District Court's dismissal.
AHA I, 812 F.3d at 194. We first clarified that
"the distinction between the jurisdictional inquiry and
the equitable merits inquiry matters, especially because it
affects our standard of review." Id. at 190. As
for the jurisdictional inquiry, we held that the Healthcare
Providers "ha[d] demonstrated that the threshold
requirements for mandamus jurisdiction [were] met."
Id. at 192. We then left the equitable merits
inquiry to the District Court to consider but, in an effort
to help guide the Court's "difficult decision,
" we "set out the factors that weigh most strongly
for and against mandamus in this case." Id.
Counseling for mandamus, we highlighted the
backlog's real impact on human health and welfare, and,
"critically to our thinking, " the Secretary's
substantial discretion over the RAC program, which
contributed significantly to the backlog. Id. at
193. Counseling against mandamus, we highlighted the
risk of "infringing on the authority and discretion of
the executive branch;" the legislative branch's
awareness of the problem and its capacity to furnish a
comprehensive solution; the Secretary's incipient but
good-faith efforts to reduce the backlog; and the
availability of some, albeit incomplete, alternative relief
in the form of "escalation." Id. at
192-93. Ultimately, "the clarity of the statutory duty,
" we remarked, "likely will require issuance of the
writ if the political branches have failed to make meaningful
progress within a reasonable period of time - say, the close
of the next full appropriations cycle." Id. at 193.
remand, the District Court balanced the equities to determine
whether mandamus was appropriate. After considering our
guidance regarding the factors that counseled for and against
the writ's issuance, the District Court evaluated the
political branches' progress - and potential for progress
- toward a solution. But by the Court's estimation, the
current measures were unlikely to yield meaningful progress,
and so it concluded that the equities weighed in favor of
mandamus. Having concluded that some relief was
warranted, the District Court ordered further briefing and a
status conference to determine the scope and substance of
Healthcare Providers proposed two sets of options: either a
means-oriented plan requiring the Secretary to take specific
actions, or an ends-oriented plan setting a timetable for
clearing the backlog. The District Court opted for a
timetable, reasoning that such an approach would
"intrude as little as possible on the Secretary's
specific decisionmaking processes and operations." Mem.
Op. at 5, No. 14-851 (D.D.C. Dec. 5, 2016), ECF No. 48
(hereinafter, "Mandamus Op."). Because it adopted
the ends-oriented approach, the Court believed that it
"need[ed] not dive into the parties' debate
over" the means. Id.
against the Healthcare Providers' proposed timetable, the
Secretary advanced three contentions relevant here. First,
although this Court indicated that curtailment or complete
suspension of the RAC program would go a long way to clearing
the backlog, AHA I, 812 F.3d at 193, the facts had
since changed: few of the newly generated appeals were
RAC-related. Second, since even dramatic changes to the RAC
program would not enable compliance with the timetable,
hitting the court-ordered targets would be impossible without
settling unsubstantiated claims en masse, which the
Secretary alleged would violate the Medicare statute. Third,
the timetable would only exacerbate the backlog: hard
deadlines would counterproductively incentivize claimants to
file meritless appeals and hold out for settlement.
District Court brushed aside the Secretary's contentions.
According to the Court, it "need[ed] not dive into the
parties' debate" over the "legality and
propriety" of the reforms necessary to comply with the
timetable, since it was not ordering any particular reforms.
Mandamus Op. at 5. Furthermore, compliance with the timetable
would not require violations of the Medicare statute, but
rather "simply demand[ed] that the Secretary figure out
how to undertake proper claim substantiation within a
reasonable timeframe." Id. (internal quotation
the Secretary refused to engage with the premise of setting a
timetable at all, proposing no alternative targets, the
District Court adopted the Healthcare Providers'
four-year plan: the Secretary was ordered to reduce the
current backlog of cases pending at the ALJ level by 30% by
December 31, 2017; 60% by December 31, 2018; 90% by December
31, 2019; and 100% by December 31, 2020.
filing an unsuccessful motion for reconsideration, the
Secretary appealed the District Court's order.
consideration of any mandamus petition 'starts from the
premise that issuance of the writ is an extraordinary remedy,
reserved only for the most transparent violations of a clear
duty to act.'" In re Core Commc'ns,
Inc., 531 F.3d 849, 855 (D.C. Cir. 2008) (quoting In
re Bluewater Network, 234 F.3d 1305, 1315 (D.C. Cir.
2000)); accord Power v. Barnhart, 292 F.3d 781, 784
(D.C. Cir. 2002) ("The remedy of mandamus is a drastic
one, to be invoked only in extraordinary circumstances."
(internal quotation marks omitted)).
previously explained that the decision to issue mandamus
relief involved two distinct inquiries: one jurisdictional,
and one regarding the equitable merits. AHA I, 812
F.3d at 190. In that previous appeal, we settled the former
question, holding that the threshold requirements for
mandamus jurisdiction were met, id. at 192, although
one of our sister circuits has since thought otherwise,
Cumberland Cnty. Hosp. Sys., Inc. v. Burwell, 816
F.3d 48, 52-57 (4th Cir. 2016). We, of course, do not revisit
our previous conclusion regarding mandamus jurisdiction.
See LaShawn A. v. Barry, 87 F.3d 1389, 1395 (D.C.
Cir. 1996) (en banc) ("One three-judge panel . . . does
not have the authority to overrule another three-judge
we focus now on the equitable merits inquiry, along with the
relief that the inquiry produced. We review this part of the
District Court's analysis for abuse of discretion. In
re Medicare Reimbursement Litig., 414 F.3d 7, 10 (D.C.
Cir. 2005). And "[a] district court by definition abuses
its discretion when it makes an error of law." Koon
v. United States, 518 U.S. 81, 100 (1996).
conclude that since the Secretary represented that lawful
compliance with the mandamus order was impossible,
it was an error of law, and therefore an abuse of discretion,
to nonetheless order the Secretary to render that performance
without first finding that lawful compliance was indeed
the District Court determined that an ends-oriented approach
of setting targets was the best course of action, it adopted
the timetable proposed by the Healthcare Providers. Because
it was mandating the ends, not the means, the Court believed
that it "need[ed] not dive into the parties' debate
over" the "legality and propriety" of the
reforms necessary to clear the backlog. Mandamus Op. at 5.
But this was a misstep. Although true that the Court was
mandating no particular reforms, the Secretary would, of
course, need to adopt some reforms to meet the
mandated timetable. After all, that was the point of mandamus
relief. But if, as the Secretary insisted, no lawful
reforms could be implemented to meet the timetable, then it
was an error of law to order the timetable met.
Secretary first contends that, given changing patterns in
appeals, the tools within his discretion - most notably,
curtailment or suspension of the RAC program - are not enough
to clear the backlog. A major reason, according to the
Secretary, is that the RAC program is no longer the principal
cause of the backlog: only 9.5% of new appeals in 2016 were
RAC-related, compared to more than 50% in 2013 and 2014.
Appellant's Br. at 18.
contention is, at best, suspect. Those statistics coincide
with a two-year suspension of most of the RAC program, which
was instituted while new contracts were being negotiated.
See Suppl. Decl. of Ellen Murray, Chief Fin. Officer
of the Dep't of Health and Human Servs., J.A. 140-41
("RAC activity decreased temporarily while [the Centers
for Medicare and Medicaid Services] was negotiating a new
Statement of Work (SOW) with the RACs, but several other
changes took place that are expected to make lasting and
continuing reductions to RAC-related appeal receipts.");
see also U.S. Gov't Accountability Office,
GAO-16-366, Medicare Fee-for-Service: Opportunities Remain to
Improve Appeals Process 38 n.64 (2016) (explaining that the
RAC program was temporarily suspended); id. at 38
("HHS reported that it expects the number of incoming
appeals to increase again when the new [RAC] contracts are
awarded and the [RAC] program resumes full operation.").
We are not sold on the Secretary's suggestion that
concerns regarding the RAC program are behind us, and the
District Court should scrutinize that claim on remand.
share the District Court's skepticism of the
Secretary's assertion that he has done all he can to
reduce RAC-related appeals. As the Court explained, there are
"around 300, 000 RAC-related appeals pending ALJ review,
which constituted a sizable portion - 31% - of all pending .
. . appeals." Mem. Op. at 13, No. 14-851 (D.D.C. Sept.
19, 2016), ECF No. 38. "Yet the only RAC-related action
the Secretary reports to be undertaking or planning to
undertake consist of three modifications to RAC contracts
that will reduce the number of appeals that reach [the ALJ
level] by [fiscal year] ...